IDC White Paper Delivering Enterprise Value With Service Management

IDC White Paper | Delivering Enterprise Value with Service Management
Sponsored by: ServiceNow

Authors:
Matthew Marden
Robert Young
March 2015
Delivering Enterprise Value with

Service Management
EXECUTIVE SUMMARY
IDCs analysis of ServiceNow customers using the companys suite of cloud-based service
management solutions demonstrates that these customers are creating substantial business
value for both their IT operations and their business operations. ServiceNow delivers this value
by reducing fragmentation of IT and other environments, automating repeatable processes,
and improving service delivery, thereby making employees more productive and IT and
business processes more efficient.
Business Value
Highlights
Total discounted benefits
over five years
$36.8M
Average return on
investment (ROI)
449%
IDC calculates that on average, ServiceNow customers interviewed for this study will capture
total discounted benefits worth $36.8 million over five years1. This means that they will
achieve an average return on investment (ROI) of 449%, with breakeven in their investment
occurring in 7.4 months, by:
management and change management
Payback period
7.4 months
E nhancing the efficiency and effectiveness of their IT operations, including incident
P
roviding user-friendly interfaces through service catalogs to save employee time when
making service and provisioning requests
L imiting unplanned downtime as a result of having a single consolidated service

automation platform
E asing the burden and reducing the complexity of audits by establishing automated
validation controls and having record traceability
D
riving higher user productivity among enterprise users by speeding service requests
and fulfillment processes with ServiceNow service management solutions, including
applications developed on the ServiceNow platform
This study applies a 12% discount rate when discussing total
benefits and costs over the five-year analysis period, whereas
Document #254569 2015 IDC. www.idc.com | Page 1
annual benefits discussed in this study are not discounted.
Situation Overview
This white paper presents IDCs analysis of the business value that 10 ServiceNow customers
are achieving with the companys service management solutions. IDC conducted in-depth
interviews with these enterprise customers to understand how ServiceNow is impacting the
customers IT and business operations. These customers represent a variety of use cases and
industry experiences. Table 1 provides an aggregated profile of these customers.
TABLE 1
Demographics of Interviewed ServiceNow Customers

Average number of employees
24,117
Average number of IT staff
1,934
Average number of internal users of IT services
20,964
Average number of ServiceNow administrators
6.5
Average number of months using ServiceNow
33
Industries

Mining, transportation,
insurance, managed care,
retail, healthcare, financial
services, IT service provider,
higher education
Countries

United States, Australia,

and South Africa
Source: IDC, 2015
Interviewed organizations have unique ServiceNow use cases that reflect their IT and business
needs. All interviewed organizations are using the ServiceNow IT Service Automation Suite,
which includes incident management, problem management, and change management,
and are leveraging the capabilities of the ServiceNow Service Automation Platform. 60% of
interviewed customers develop custom applications using the CreateNow Development
Suite to address specific challenges and establish strategic advantages. Several customers are
using service management applications for service domains such as human resources (HR),
facilities, and field service.
On average, the customers interviewed by IDC had been using ServiceNow for nearly three
years at the time of their interview. They migrated to ServiceNow from a variety of IT service
platforms ranging from IT service management (ITSM) tools offered by other vendors to
homegrown tracking efforts based on Excel spreadsheets.
Service Management Trends
G
rowth in the consumerization of IT, BYOD, mobility, and virtualization is driving
increasingly heterogeneous and hybrid IT environments that are adding significant
complexity to IT service delivery and support within the enterprise.
B
usiness users are becoming more mobile and reliant on self-service technologies;
therefore, IT organizations must increasingly leverage advanced, automated service
management processes as well as collaboration tools to engage users and empower users
to remain relevant and effective in their respective organizations.
W
ith the proliferation of and easy access users have to consumer-grade/cloud-based
applications outside the enterprise, ITs failure to deliver similar experiences in the business
environment can foster rogue IT trends such as shadow IT.
A
s business units witness the IT departments gained efficiencies and increased agility via
improved process and automation, they increasingly seek their own service management
solutions to improve service delivery capabilities across the business.
S ervice management software delivered through SaaS will continue to gain traction in
organizations of all sizes as customers continue to seek solutions that reduce up-front
capital expenditures as well as ongoing maintenance.
ServiceNow Overview
S erviceNow offers a single cloud-based service automation platform that enables

customers to build a single system of record that can be accessed by multiple
applications. The platforms underlying architecture allows services and applications to
share the same data model and code to assist IT organizations in reducing fragmentation
of their IT environments as well as improve service delivery.
T he ServiceNow platform delivers foundational capabilities utilized by all the applications

running on top of it whether the applications are created by ServiceNow, its partners,
or its customers. Those platform capabilities include configuration management,
knowledge management, collaboration tools, survey management, service-level
management, instant application mobility, reporting and analytics, service mapping, and
request management available to all service domains via an easy-to-use service catalog.
S erviceNow is expanding its core capabilities to adjacent markets, including the

worldwide system management software management market, which is expected to
grow from approximately $17.9 billion today to $24.7 billion by 2018. ServiceNow has
been increasing its capabilities in the areas of orchestration and workflow for automation
of processes and technical operations, cloud provisioning of resources on-demand
and through self-service, and business service mapping capabilities that add a service
orientation to infrastructure discovery capabilities already present in the core ServiceNow
platform. The capabilities integrate with the core platform and IT service management
to dramatically improve incident management, problem management, and change
management capabilities to address issues that are exposed as a result of the integration
with IT operations management.
S erviceNow also supports a broad range of ITIL-compliant functions, including discovery,

CMDB population, incident management, change management, problem management,
asset management, event management, and release management.
T he ServiceNow platforms application creation and task automation capabilities and

single data model are increasingly driving usage of the product outside the IT department
and in business functions such as HR and facilities. ServiceNow has entered into several
strategic partnerships and introduced product enhancements that bolster service
management capabilities across the enterprise.
N
on-developers can build applications that business units can utilize to automate the
delivery of their services.
IT departments and business units alike can transform manual and inefficient service
delivery models (often reliant on disparate spreadsheets, email, and point solutions) into
automated and user-centric service experiences consisting of online support, forms,
There was recognition

from our executive
leadership that the
information technology
organization needed
to be positioned to
support the growth
of the company. We
had several legacy
systems and platforms
that were past their
end of useful life,
and the IT leadership
recognized the need for
modernization.
knowledge bases, and collaboration technologies.
Business Value of ServiceNow

Interviewed customers repeated a common theme in describing why they chose ServiceNow:
They needed a more robust platform that could better support their business. Legacy and
homegrown service platforms could no longer deliver the quality of IT services demanded,
let alone drive productivity gains among all functions of the business. Several interviewed
customers voiced these ideas in describing their choice of ServiceNow, with an IT director at
Bristow Group articulating it as:
There was recognition from our executive leadership that the information technology
organization needed to be positioned to support the growth of the company. We had several
legacy systems and platforms that were past their end of useful life, and the IT leadership
recognized the need for modernization.
Representatives from organizations interviewed reported achieving strong operational

efficiencies and employee productivity gains with ServiceNow. All of these organizations
cited such gains in terms of IT operations, and most have successfully deployed ServiceNow
to support at least some lines of business (LOBs). Respondents ranked automation, IT system
consolidation, having a single system of record, and improved IT transparency as among the
most significant benefits of ServiceNow (see Figure 1). These choices reflect core value traits
of ServiceNow such as service management and improved operational visibility that provide
benefits across the organization.
FIGURE 1
Benefits of ServiceNow
n Top benefit
n Second benefit
n Third benefit
n Fourth benefit
n Fifth benefit
Cost savings
Reduced infrastructure maintenance requirements
Consumerized IT processes
Improved scalability of IT
Single system of record (ERP for IT)
Consolidation of IT systems
Improved IT transparency
Automation of manual tasks
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
% of organizations
Note: Interviewees were asked to rank the top five benefits of using ServiceNow from a list of potential benefits in order of importance.
Seven interviewed customers provided responses to this question.
Source: IDC, 2015
In general,
organizations
interviewed for this
study initially deployed
ServiceNow as a single
consolidated IT service
automation platform,
but most have since
extended its use to
at least some other
service domains. This
extension represents
the organizations
understanding that
ServiceNow benefits
can be equally
impactful on IT
operations and lines of
business.
Financial Benefits Analysis

Based on data collected during interviews with these organizations, IDC measured the
aggregated average financial impact of using ServiceNow. These financial benefits are found
in both the IT operational efficiencies created by ServiceNow and its positive impact in terms
of enterprise service delivery. In general, organizations interviewed for this study initially
deployed ServiceNow as a single consolidated IT service automation platform, but most have
since extended its use to at least some other service domains. This extension represents the
organizations understanding that ServiceNow benefits can be equally impactful on IT operations
and lines of business. The types of benefits that companies attribute to ServiceNow reflect the
increasing prominence of service management disciplines in their use cases, particularly in terms
of developing custom applications and using ServiceNow applications designed for specific
service domains HR, facilities, and field services, for example.
IDC calculates that in total, these customers will achieve benefits worth an average of $10.76
million per organization per year over five years, or $51,336 per 100 users of IT services at these
customers:
I T staff productivity gains: IT operations, including incident management and change

management, have become more efficient and effective because of automation, improved
IDC calculates that in

total, these customers
will achieve benefits
worth an average of
$10.76 million per
organization per year
over five years, or
$51,336 per 100 users.
visibility, and repeatable processes enabled by ServiceNow. IDC calculates that organizations
will record IT staff productivity benefits worth an average of $5.63 million per organization
per year over five years, or $26,871 per 100 users.
M
inimizing burden of risk: Organizations experience less productivity-impacting downtime
and must devote fewer resources to meeting audit requirements with ServiceNow. IDC
calculates that resulting employee productivity gains and cost savings are worth an average
of $2.77 million per organization per year over five years, or $13,194 per 100 users.
H
igher employee productivity: Line-of-business employees have become more productive
because processes surrounding areas such as service requests, incident management,
procurement, and onboarding are improved as a result of automation, repeatable processes,
and improved operational visibility. IDC calculates that this increased productivity is worth an
average of $1.88 million per organization per year over five years, or $8,970 per 100 users.
L ower IT infrastructure costs: Customers are leveraging their use of ServiceNow to reduce
datacenter-related costs as well as license and maintenance costs. IDC projects that these
customers are capturing cost savings worth an annual average of $482,426 per organization
over five years, or $2,301 per 100 users (see Figure 2).
FIGURE 2
Average Annual Benefits ($ per Customer)

12,000,000
$482,426
($ per customer)
10,000,000
$1,880,438
8,000,000
$2,765,962
6,000,000
4,000,000
$5,633,146
2,000,000
0
IT staff
productivity
gains
Risk mitigation
end-user
productivity gains
Business
productivity
benefits
IT infrastructure
cost reductions
Total: $10.76 million per year per customer

Note: Average annual benefits are not discounted in this study.
Source: IDC, 2015
IT Staff Productivity Gains with ServiceNow

Interviewed organizations are capturing substantial value in their IT operations as a result
of IT staff efficiencies and increased staff productivity delivered by ServiceNow, particularly
its IT Service Automation Suite. With ServiceNow in place, IT teams can do more without
commensurate staff increases while also becoming more valuable to the businesses they
support by enabling business growth, offering improved IT scalability, and making it easier
to integrate acquired entities. IDC calculates these IT staff-related benefits to have an
average annual value of $5.63 million per organization over five years, or $26,871 per 100
users.
ServiceNow drives value for IT staffs by delivering a single platform that enables users
to build a single system of record for IT. As a result, organizations are able to integrate
previously disjointed IT operations, create robust and reliable workflows, and adopt ITSM
best practices. These types of improvements allow IT staff to work much more efficiently,
free up time for innovative and business-enabling activities, and help IT teams better
establish themselves as partners to the lines of business they support. An IT director at the
University of Sydney explained the benefits of moving to ServiceNow:
We had an on-premise incident management system that we were using that wasnt meeting
our needs. The intent with ServiceNow was for us to move toward a tool that had stronger
workflow and the ability to put in place a self-service capability as well as the ability to push
out knowledge elements to customers with a broader set of functionality more in line with
where we want to take our organization.
We had an on-premise
incident management
system that we were
using that wasnt
meeting our needs.
The intent with
ServiceNow was for
us to move toward a
tool that had stronger
workflow and the
ability to put in place a
self-service capability
as well as the ability to
push out knowledge
elements to customers
with a broader set of
functionality more
in line with where
we want to take our
organization.
These efficiencies and improvements in process have changed users perceptions of IT

departments at several interviewed organizations. An IT manager at a U.S. financial services
company explained: After we deployed ServiceNow, the IT organization became the guys
to follow. Such a change in sentiment increases LOB comfort with using IT services and
helps position IT as a value provider. With ServiceNow in place, several organizations have
undertaken significant efforts to change how IT services are provided. For example, a senior
manager at a global financial services company credited ServiceNow with enabling a
corporate initiative to bring IT talent back in-house.
The customers use of ServiceNow has enabled substantial efficiencies for their incident
management operations, an important benefit given the resources these organizations
devote to incident management operations. IDC calculates that on average, the organizations
incident management teams have become 46.6% more productive with ServiceNow in
place (see Figure 3). As a result of automated workflows and improved operational visibility,
these teams can handle more incidents without corresponding growth to staff or have cut
the average time it takes their team to handle an incident. An IT manager at an international
financial institution said that ServiceNow has enabled his team to handle about 100%
more incidents, and thats a very low estimate. The vice president of global operations at an
international resources company praised the impact of ServiceNow on incident management
operations, saying: In the past, tickets were not logged in the system and people just tried to
grab an IT guy in the hall or keep calling him. Its so much easier now to go and look online. An IT
We have become a
lean and mean ITIL
shop with a rock-solid
incident and problem
management system in
place with ServiceNow.
manager at Equinix summarized how ServiceNow has affected Equinixs IT operations: We

have become a lean and mean ITIL shop with a rock-solid incident and problem management
system in place with ServiceNow. According to an IT manager at REI, ServiceNow has helped
make REIs IT process considerations more proactive: Previously, we spent a lot of time trying to
resolve issues, trying to make a tool work better for us. Now, the conversation has moved almost
entirely to process improvement. This means were able to do things we werent able to do before.
FIGURE 3
Average Productivity Gain by IT Service

Area with ServiceNow
(% productivity/efficiency gain)
43.7%
46.6%
33.1%
Change
management
Problem
management
Incident
management
Source: IDC, 2015
Customers are also capturing IT operational efficiencies in areas such as change management,
problem management, and release management. For several organizations, the ability to
develop custom applications within the ServiceNow platform to support these operations
has been critical to recording these improvements. By leveraging custom applications and
ServiceNow integration capabilities, organizations can provide IT services that match their
maturity levels and thereby gain higher user acceptance. The IT manager at REI explained the
benefits of application customization with ServiceNow: We do a lot of growing into a process
by customizing something while we grow into our ability to move into the formal app. Customers
also reported leveraging automation and workflows with ServiceNow to achieve staff time
savings in areas such as password reset and management of their configuration databases.
In addition to specific areas of impact within IT teams, ServiceNow Performance Analytics
has enabled the collection of better and more actionable information about IT operations. A
financial institution explained: Before ServiceNow, everything was done in a best-effort manner.
Now, we have great reporting capabilities, and people see what is really going on with incident
management. For us, this means that if you can measure it, you can manage it. Other customers
referenced the business value of putting more and better information in front of business
decision makers: An IT manager at a major insurance company noted: With ServiceNow, a
consistent, standard report is being used by all officers, so decisions across the organization are
being made from a common ground.
Minimizing Burden of Risk with ServiceNow

Interviewed organizations reported that ServiceNow provides them with a more robust,
reliable platform for IT and other LOB operations and is easing the burden of meeting audit
requirements. IDC projects that ServiceNow is providing value to these customers worth an
average of $2.77 million per organization per year for five years, or $13,194 per 100 users, by
helping them avoid the loss of productive employee time and trimming costs associated with
their compliance efforts.
A number of customers used ServiceNow to replace diffuse and unstable legacy IT service
platforms that were neither sufficiently reliable nor robust. As a result, these legacy platforms
were subject to frequent and lengthy outages that left users without access to important IT
and other business applications. ServiceNow has helped organizations reduce the frequency
of unplanned downtime on their service platforms (38.5% fewer unplanned downtime
instances) and resolve downtime faster (21.4% faster resolution).
Having ServiceNow
come in with a code
base thats designed
for integration, a code
base thats software as
a service, that we dont
have to take a lot of
downtime for what the
vendors doing, thats
just added frosting on
the cake.
The increase in reliability and availability with ServiceNow is based on several factors,
including the consolidated nature of the ServiceNow platform, use of a single-instance
architecture, security of customer data in ServiceNows enterprise-grade cloud architecture,
compliance with industry standards, and having better information about incidents and
changes. The IT manager at the major insurance company praised the reliability of the
ServiceNow architecture: Having ServiceNow come in with a code base thats designed for
integration, a code base thats software as a service, that we dont have to take a lot of downtime
for what the vendors doing, thats just added frosting on the cake.
ServiceNow is also helping organizations lessen the challenge of meeting audit requirements.
With ServiceNow in place, organizations that need to prepare for audits can leverage
automation and data traceability to greatly reduce the amount of time spent in preparation.
ServiceNow customers said that by using definitions and scripts, they are avoiding timeconsuming and laborious processes they had to follow with their legacy platforms while
reducing the overall complexity of complying with audits. In addition, the ServiceNow
IT Governance, Risk and Compliance application helps customers meet compliance
requirements by documenting and enforcing policies and creating remediation plans for noncompliance. Organizations also benefit from being more certain that they are meeting audit
requirements and lowering costs associated with hiring external auditors. For organizations
in industries with burdensome audit requirements, deploying ServiceNow has proved to be a
boon to their compliance efforts (see Table 2).
TABLE 2
Risk Mitigation Benefits with ServiceNow

Before ServiceNow
After ServiceNow
Benefit
Advantage (%)
Unplanned Downtime
Unplanned downtime instances per year
111.16
68.38
42.78
38.5
Hours per unplanned downtime instance
4.44
3.49
0.95
21.4
Productive hours lost per year per user
12.46
6.59
5.87
47.1
Audit Operations
Audit team productivity gain (%)
External audit spending per year ($)
98,125
30,575
38.3
38.3
67,550
68.8
Note: Table 2 represents averages across the 10 ServiceNow customers interviewed for this study.
Source: IDC, 2015
Customers have
achieved higher
employee productivity
levels in business
functions across the
organization because
of ServiceNow
service management
capabilities. The
same qualities that
create efficiencies
in the delivery of IT
services drive higher
productivity outside IT,
including automation,
reusing validated
information through
the ServiceNow
Knowledge Base, and
repeatable processes.
Higher Employee Productivity with ServiceNow

Customers have achieved higher employee productivity levels in business functions
across the organization because of ServiceNow service management capabilities.
The same qualities that create efficiencies in the delivery of IT services drive higher
productivity outside IT, including automation, reusing validated information through
the ServiceNow Knowledge Base, and repeatable processes. In addition, ServiceNow
has enabled organizations to consumerize service delivery through interfaces such as
the ServiceNow Service Catalog. User-friendly and accessible interfaces supported by
automated workflows encourage employees to make use of service platforms, thereby
enabling efficiencies and minimizing the time needed to address mistakes and carry out
follow-up efforts. IDC calculates that in total, these productivity benefits have an average
annual value of $1.88 million per organization over five years, or $8,970 per 100 users.
Employee Efficiencies Driven Through Service Management for IT

Customers interviewed for this study have leveraged IT service management with
ServiceNow to capture efficiencies, time savings, and productivity gains outside their
IT departments. Two prominent examples of these types of efficiencies are user time
savings through the use of Service Catalog and higher employee productivity through
improved IT support capabilities:
S
ervice Catalog: Customers using Service Catalog reported that their employees
spend 92.9% less time on service and provisioning requests. Time savings are relatively
small per instance but accumulate quickly, with an average of 52,000 requests made
through their service catalogs per year. A U.S. financial institution noted that it used to
have about the equivalent of six full-time employees on hold on the help desk at all times,
an inefficiency it has nearly eliminated with its service catalog.
H
igher productivity with IT support: Improved IT service levels achieved with
ServiceNow benefit user productivity, especially when users perceptions of an
organizations IT capabilities evolve. CareWorks CIO provided an example of a company
unit with many remote workers. He explained: Before ServiceNow, the whole model was
broken, and often these remote employees didnt want to talk to IT, and IT couldnt help them.
By doing a full IT integration with MobiChord to support a BYOD program on ServiceNow,
weve increased their productivity by at least 1020%.
Service Management Productivity Increases Across the Business

A number of interviewed organizations also reported achieving efficiencies and driving
employee productivity for lines of business with ServiceNow service management
capabilities. In essence, these customers have taken the ServiceNow service model used by
their IT departments and applied it where beneficial to other areas of enterprise services.
The use of ServiceNow in other service domains has occurred both by design and as a
result of feedback from users asking about the possibility of using ServiceNow to support
their own service operations. As with IT services, ServiceNow helps companies realize value
in other functions of the business by creating efficiencies and driving productivity gains
through automated, more consistent processes and workflows.
These customers are realizing efficiencies with ServiceNow in terms of process
improvements for the delivery of services and handling of procurement requests. For
example, the efficiency of onboarding new employees depends on providing them with
equipment and support in a timely fashion. By extending ServiceNow to processes related
to onboarding these employees, surveyed organizations are reducing the average time to
onboard a new employee by 62% (see Table 3).
TABLE 3
Business Productivity KPIs

Before ServiceNow
After ServiceNow
Benefit
Advantage (%)
New Employee Onboarding

Number of new employees
337
337
onboarded per year
Average number of days to onboard
a new employee
11.83
Total productive hours lost per year during 31,884

onboarding of new employees
4.50
7.33
62.0
12,125
19,759
62.0
Service Catalog
Number of requests per year
58,307
58,307
Time per request (hours)
0.646
0.046
0.600
92.9
Total hours of requests per user
5.258
0.373
4.885
92.9
Note: Table 3 represents averages across the 10 ServiceNow customers interviewed for this study.
Source: IDC, 2015
ServiceNow customers
said they are benefiting
from the ease of creating
new applications within
ServiceNow. Interviewed
customers have gone
from creating few, if any,
custom applications
with their previous ITSM
platforms to an average
of seven applications per
year with ServiceNow.
These applications
often provide the basis
for greater efficiencies
with ServiceNow in the
IT arena and enable
the use of its service
management capabilities
across all service domains.
ServiceNow customers also said they are benefiting from the ease of creating new
applications within ServiceNow. Interviewed customers have gone from creating few, if any,
custom applications with their previous ITSM platforms to an average of seven applications
per year with ServiceNow. These applications often provide the basis for greater efficiencies
with ServiceNow in the IT arena and enable the use of its service management capabilities
across all service domains. Customers reported leveraging ServiceNow to save time
associated with an average of 7,333 HR requests, 515 finance requests, and 719 facilities
requests per year.
Customers interviewed for this study described a number of use cases for ServiceNow in the
lines of business:
O
mnicare, a provider of pharmaceutical services, has used ServiceNow to automate
the monitoring of the robots it depends on to dispense drugs to pharmacies. Omnicare
can now better escalate maintenance issues with these robots as they arise and has
established triage rules to ensure that the right person is notified when problems occur.
As a result, Omnicares robots are being repaired faster, engineer time is saved, and
Omnicares robots have higher availability to support the companys business.
A
United Statesbased financial institution is using ServiceNow to cover its financial
services, agency services, and customer complaint centers. The impetus for using
ServiceNow in these areas came from employees asking about improvements made
by the IT department with ServiceNow. Employees in these areas are now benefiting
from having a familiar, customer-friendly interface for ordering the supplies and services
they need to perform their jobs. As the IT manager at this institution explained: I
havent needed to buy a workflow system for the financial service center or a complaint
management system for the complaint management group.
IDC heard from several

interviewees that
ServiceNow Asset
Management has given
their organizations
visibility into areas
such as device and
software use to identify
where overprovisioning
is occurring. One
customer said: We just
didnt know what we
had out there before
deploying ServiceNow.
R
EI, a leading U.S. retailer of outdoor recreation gear, is using the ServiceNow platform
to support activities of certain service domains. Teams such as HR and facilities are using
ServiceNow to process and resolve inquiries and requests more efficiently. REI is also
leveraging ServiceNow to support teams responsible for interacting with customers. For
example, its business analysts are reclaiming time by deploying a customer feedback
application on ServiceNow. Because this application pulls in all needed data, normalizes
and transforms the data, and puts the data into a user-friendly output, these analysts
spend much less time searching for information about comments or feedback left by
customers on the companys Web site. Beyond saving valuable employee time, this
enables REI to respond to customer feedback more effectively.
B
ristow Group, a provider of offshore helicopter transport services, uses ServiceNow
to support fleet support services for its maintenance engineers. Use of ServiceNow has
improved Bristow Groups overall fleet maintenance operations, which ensures maximum
fleet availability and safety.
Lower IT Infrastructure Costs with ServiceNow

Customers interviewed for this study also reported IT-related cost savings with ServiceNow.
Consolidating IT service operations on the ServiceNow platform has enabled organizations to
decommission legacy platforms and ITSM solutions. Further, several organizations reported
that ServiceNow has helped minimize their reliance on outsourced IT services, thereby
delivering the dual benefits of reducing costs and helping them prioritize the in-housing
of IT talent to drive their businesses. IDC puts the value of these cost savings at an annual
average of $482,426 over five years per organization, or $2,301 per 100 users.
Customers are saving on hardware- and software-related datacenter expenses by using
ServiceNow as a cloud-based solution. Organizations that move legacy IT service platforms
out of their own datacenters can reclaim servers, avoid software costs, and redirect IT staff
time to better support business innovation. In addition, these companies can use ServiceNow
products to manage their own datacenters more efficiently, thereby reducing capital and operating
expenses.
In addition, IDC heard from several interviewees that ServiceNow Asset Management has
given their organizations visibility into areas such as device and software use to identify where
overprovisioning is occurring. One customer said: We just didnt know what we had out there before
deploying ServiceNow. Because of the operational visibility these organizations now have with
ServiceNow, they can identify areas where they can potentially achieve savings and better match
their provisioning to actual business need (see Figure 4).
FIGURE 4
Average Annual IT Infrastructure Cost Savings ($ per Customer)

600,000
($ per customer)
500,000
$53,339
400,000
$173,052
300,000
$77,208
200,000
100,000
According to CTO Bart

Murphy, CareWorks
deployed ServiceNow
as a core component
of this strategy after
realizing that its
functionality extended
well beyond IT
operations. Murphy
explained that, after
reviewing and testing
ServiceNow, CareWorks
concluded that it
could use ServiceNow
as an ERP for IT and
therefore facilitate the
entire shared services
strategy that it needed
to deploy.
$1,799
$177,027
Legacy solution
Hardware
related
Software
related
Training
Provisioning
Total: $482,426 per year per customer

Source: IDC, 2015
Customer Case Studies

CareWorks: ServiceNow as the Foundation for Re-Envisioning Delivery
of IT Services
The CareWorks Family of Companies provides claims and medical management services for
workers compensation, disability, and integrated absence management for companies in Ohio.
In 2011, CareWorks ended more than a decade of outsourcing its core IT services to a managed
services provider and concentrated on developing internal IT capabilities to support its business.
According to CTO Bart Murphy, CareWorks deployed ServiceNow as a core component of this
strategy after realizing that its functionality extended well beyond IT operations. Murphy explained
that, after reviewing and testing ServiceNow, CareWorks concluded that it could use ServiceNow as
an ERP for IT and therefore facilitate the entire shared services strategy that it needed to deploy.
Murphy said that a significant benefit to his company of using ServiceNow is its impact on
how employees view IT and their satisfaction with IT services. Murphy acknowledged that
surveys of user satisfaction with IT before the deployment of ServiceNow showed that we
had fairly low numbers across the board. However, with ServiceNow in place, CareWorks has
created user-friendly, customizable, and repeatable processes that make employees more
comfortable with using IT and leveraging it to their advantage. Murphy cited one team of
remote workers in particular who struggled to get the IT support they needed before the
deployment of ServiceNow. Now, those employees proactively engage the IT team, and
Murphy attributed a 1020% productivity gain to this 100+ person team as a result.
ServiceNow has also had a positive impact on CareWorks audit operations. CareWorks
operates in a highly regulated industry and must meet extensive and ongoing audit
requirements. Murphy explained that his company is using the ServiceNow IT Governance,
Risk and Compliance application to automate tasks and controls to create full traceability to
changes and other actions. This not only allows CareWorks to avoid hiring at least another 1.5
employees for its audit team and save over $125,000 per year in external audit costs but also
provides CareWorks with the confidence that it can meet strict compliance requirements.
Murphy noted that ServiceNow has helped CareWorks ensure that it meets a company policy
that requires departing employees to be completely offboarded within 24 hours and provides
CareWorks with the necessary documentation that it has met this requirement.
Murphy also credited ServiceNow with delivering substantial IT staff efficiencies and
productivity gains. He explained that with ServiceNow, were obviously able to take on more
incidents and resolve them faster without adding staff. For example, in 2013, CareWorks
handled 76% more incidents and resolved incidents 45% faster on average than in 2012.
Changes are also delivered faster; ad hoc database updates took up to a week before
ServiceNow; they were completed in an average of less than two hours by mid-2014, allowing
employees who benefited from these changes to capture additional productivity.
Murphy stressed that ServiceNow has become an important part of his companys overall
IT and business strategies, including providing a platform for integrating new acquisitions
in as little time as possible. In addition, he believes that CareWorks will realize further audit,
business, and IT efficiencies as his company continues to standardize operations on the
ServiceNow platform.
Omnicare: Using Service Management to Support Critical

Business Operations
Omnicare, the largest institutional pharmacy provider in the United States, dispenses drugs to
nursing homes, assisted-living centers, and other long-term care facilities in the United States
and Canada. In total, it serves facilities with more than 1 million patient beds. Kim Liston,
senior director of service delivery at Omnicare, explained that her organization has expanded
its use of ServiceNow in the past few years from its initial focus on improving its IT support
operations to improving core business operations with service management.
According to Liston, Omnicare first used ServiceNow to create IT efficiencies and change the
culture of its IT support operations by instituting gamification with ServiceNow. Omnicare
accomplished this by implementing a game within the ServiceNow platform that engaged
its IT support staff and rewarded superior IT staff performance. Liston said that ServiceNow
gamification paid immediate dividends by improving IT service levels: We could start to
demonstrate measurable improvements in our service and delivery goals. So we were able to use
this gamification within ServiceNow to get people excited about their jobs, and we have been
sustaining incredible service levels from our IT staff through today. According to Liston, the
abandonment rate for users contacting IT has decreased by 90% since Omnicare began its
gamification effort, and its IT team is now able to handle approximately two times as many
contacts through calls, etickets, and service catalog tasks without a commensurate increase in
staff level.
Omnicare has customized

the ServiceNow HR
Service Automation
application to support
its HR teams efforts.
Liston explained that
this ServiceNow plug-in
benefits Omnicares HR
team by automatically
directing employee
inquiries and contacts
to the right team
members. In addition,
all of the interactions
between the HR team
and the employees are
captured and tracked
with ServiceNow, which
gives Omnicare better
visibility to improve its HR
management efforts.
Omnicare has since moved ServiceNow beyond its IT operations to support business
operations, including pharmacy automation. Liston said that Omnicare has automated
monitoring and event management in ServiceNow for the robotics technology that is used
in its pharmaceutical hubs throughout the United States. With ServiceNow supporting
these operations, Omnicare can now better escalate management issues with the robots as
these issues arise and has established triage rules to ensure that the right person is notified
when problems occur. As a result, Omnicares automated technology is being repaired faster,
its 40-member engineer team is saving time, and there is higher availability of the critical
equipment that the company relies on to distribute drugs to its skilled nursing facilities and
assisted-living communities.
In addition, Omnicare has customized the ServiceNow HR Service Automation application
to support its HR teams efforts. Liston explained that this ServiceNow plug-in benefits
Omnicares HR team by automatically directing employee inquiries and contacts to the right
team members. In addition, all of the interactions between the HR team and the employees
are captured and tracked with ServiceNow, which gives Omnicare better visibility to improve
its HR management efforts. In addition, Omnicare has automated its employee onboarding
process through the ServiceNow Service Catalog, and electronic interfaces between its HRIS
and ServiceNow trigger workflows and the automatic creation of internal accounts as well
as the ability to select and order IT and other equipment, saving time for HR staff and new
employees.
ROI Analysis
IDC used direct interviews with customers to determine the financial impact of the use
of ServiceNow. IDC uses a discounted cash flow methodology to calculate the return on
investment and payback period. ROI is the ratio of the net present value (NPV) and discounted
investment. The payback period is the point at which cumulative benefits equal the total
investment up until that time.
Cost-Benefit Analysis
IDC assessed the costs, benefits, and value associated with the use of the ServiceNow suite of
cloud-based service management solutions by the 10 organizations interviewed for this white
paper and projected the benefits and costs associated with their use over a five-year period
(see Figure 5). The costs and benefits by year depicted in Figure 5 are not discounted. Based
on this analysis, IDC projects that these organizations will spend an average of $1.80 million
per organization per year ($8,586 per 100 users) for five years and $458,946 per organization
initially ($2,189 per 100 users initially) on ServiceNow licenses, training, external consulting,
development, and maintenance. IDC calculates that in return, these organizations will achieve
an average of $10.76 million in benefits per organization per year over five years, or $51,336
in benefits per 100 users. This means that IDC expects the average organization surveyed to
realize a cumulative net gain of $44.35 million over five years, or $211,561 per 100 users.
FIGURE 5
Cost-Benefit Analysis per Customer

50,000,000
$44,350,786
($ per customer)
40,000,000
30,000,000
20,000.000
$10,063,214
10,000,000
0
-10,000,000
$11,486,784
$13,129,365
Investment
Benefits
Cumulative net benefit
$4,358,551
$0
-$458,945
Initial
-$859,681
Year 1
-$1,856,691
Year 2
-$1,998,615
-$2,138,581
Year 3
Year 4
Note: Benefits and investment costs depicted in Figure 5 are not discounted.
Source: IDC, 2015
$14,771,945
-$2,146,559
Year 5
Five-Year ROI Analysis

Table 4 provides IDCs five-year ROI analysis for the organizations use of ServiceNow. The
analysis shows that the average organization interviewed for this white paper will spend $6.71
million (discounted) per organization over five years, or $31,990 per 100 users, and in return
capture $36.82 million in discounted benefits over five years, or $175,618 per 100 users. This
results in a net present value for the average organization of $30.11 million over five years,
or $143,628 per 100 users, meaning that the average organization will break even on its
investment in ServiceNow in 7.4 months and achieve an ROI of 449%.
TABLE 4
Five-Year ROI Analysis

Average per Organization Average per 100 Users
Benefit (discounted)
$36.82 million
$175,600
Investment (discounted)
$6.71 million
$32,000
Net present value (NPV)
$30.11 million
$143,600
Return on investment (ROI) 449%
449%
Payback period
7.4 months
7.4 months
Discount rate
12%
12%
Note: Benefits and investment costs are discounted by 12% per IDCs methodology for all numbers in Table 4.
Source: IDC, 2015
Challenges/Opportunities
ServiceNows comprehensive and automated approach to service management stands to
reduce the complexity and cost associated with delivering optimal IT resources and businessrelated services across the enterprise. As a result, this allows IT executives to attribute fewer
resources toward manual tasks and focus more on becoming strategic business partners,
driving technology adoptions that directly result in increased business efficiencies.
However, many organizations have made significant investments in point products such as
standalone IT service desk solutions and departmental ERP systems and may be content with
leveraging them to address specific business functions.
Therefore, potential customers must understand the value proposition of ServiceNows unified
platform in providing process continuity as well as optimizing the collection, management, and
utilization of information across the entire organization within a single system of record.
Challenges
P
rocess maturity can vary widely between IT organizations, with many struggling to
optimize their own internal service management workflows.
O
vercoming cultural changes within IT organizations is often a roadblock in
maturing service delivery models and thus can limit the IT staffs ability to address
business-focused imperatives.
E ffectively executing service management concepts in new service domains

will often require IT staff to translate ITSM terminology into business language,
specifically within the context of the service management solution.
W
ith IT budgets generally remaining flat, IT buyers are increasingly seeking service
management solutions that not only provide advanced service delivery capabilities
but also enable them to lower the products total cost of ownership (TCO).
Industry-specific knowledge is often required when implementing service delivery

models in line-of-business units, particularly those operating within verticals such
as healthcare and government.
Opportunities
A
s businesses increasingly rely on rapidly changing technology to remain
competitive, IT executives will find a greater need to position themselves as
strategic business partners and drive technology adoptions that directly result in
improving business processes and productivity.
A
s IT organizations continue to mature their processes and automate operational
workflows, they can begin to foster additional business value by applying the IT
service model to line-of-business units.
T he robust professional services and established partner ecosystem of ServiceNow

allows IT organizations to ensure successful product implementations, and available
integrations can optimize service management processes.
Recommendations
IDC believes that as a wide range of systems and services are increasingly provided
in hybrid delivery models, decentralized management tools and manual processes
will become more and more inefficient and will challenge an organizations ability to
effectively capture and utilize critical data.
F or IT executives to overcome the challenges associated with adopting new

technologies, they must leverage solutions that provide advanced automation
capabilities to allow them to optimize IT and business productivity and reduce the
complexity and cost associated with managing IT systems and services.
IT organizations will increasingly be expected to advance their IT service and operations
management maturity to increase their focus on initiatives that directly align with
business imperatives.
B
y propagating service management models across the enterprise while simultaneously
leveraging a single system of record, IT organizations can significantly enhance their
business value proposition by enabling companywide process and knowledge
continuity.
Conclusion
A number of trends are converging to make service management more important to all
service domains. The automation of service has become a core way for IT departments
to efficiently deliver their work in increasingly heterogeneous and hybrid environments.
Meanwhile, as business leaders better understand the potential value of service
management for their teams, they want to leverage automated processes to maximize their
employees productivity and ability to engage their customers.
IDCs research shows that ServiceNow customers are achieving substantial business value
with the companys cloud-based service management solutions for both their IT operations
and their business operations. As these customers have reached higher levels of maturity
in automating IT processes, they are increasingly extending their use cases of ServiceNow
to all service domains to improve critical business operations and make users more
productive.
Appendix: Research Method

IDC utilized its standard ROI methodology for this project. This methodology is based on
gathering data from current ServiceNow users as the foundation for the model. Based on
these interviews, IDC performs a three-step process to calculate the ROI and payback period:
M
easure the savings from reduced IT costs (staff, hardware, software, maintenance, and
IT support), increased user productivity, and improved revenue over the term of the
deployment.
A
scertain the investment made in deploying the solution and the associated training and
support costs.
P
roject the costs and savings over a five-year period and calculate the ROI and payback for
the deployed solution.
IDC bases the payback period and ROI calculations on a number of assumptions, which are
summarized as follows:
T ime values are multiplied by burdened salary (salary + 28% for benefits and overhead) to
quantify efficiency and manager productivity savings.
D
owntime values are a product of the number of hours of downtime multiplied by the
number of users affected.
T he impact of unplanned downtime is quantified in terms of impaired end-user

productivity and lost revenue.
L ost productivity is a product of downtime multiplied by burdened salary.
L ost revenue is a product of downtime multiplied by the average revenue generated per
hour.
T he net present value of the five-year savings is calculated by subtracting the amount that
would have been realized by investing the original sum in an instrument yielding a 12%
return to allow for the missed opportunity cost. This accounts for both the assumed cost
of money and the assumed rate of return.
Because every hour of downtime does not equate to a lost hour of productivity or revenue
generation, IDC attributes only a fraction of the result to savings. As part of the assessment,
IDC asked each company what fraction of downtime hours to use in calculating productivity
savings and the reduction in lost revenue. IDC then taxes the revenue at that rate.
Further, because IT solutions require a deployment period, the full benefits of the solution
are not available during deployment. To capture this reality, IDC prorates the benefits on a
monthly basis and then subtracts the deployment time from the first-year savings.
Note: All numbers in this document may not be exact due to rounding.
IDC Global Headquarters

5 Speen Street
Framingham, MA 01701
USA
508.872.8200
Twitter: @IDC
idc-insights-community.com
www.idc.com
Copyright Notice
About IDC
External Publication of IDC Information
International Data Corporation (IDC) is the premier global provider of market intelligence,
and Data Any IDC information that is

to be used in advertising, press releases,
advisory services, and events for the information technology, telecommunications and consumer
or promotional materials requires prior
technology markets. IDC helps IT professionals, business executives, and the investment
written approval from the appropriate

IDC Vice President or Country Manager.
community make fact-based decisions on technology purchases and business strategy. More
A draft of the proposed document
than 1,100 IDC analysts provide global, regional, and local expertise on technology and industry
should accompany any such request.
opportunities and trends in over 110 countries worldwide. For 50 years, IDC has provided
IDC reserves the right to deny approval

of external usage for any reason.
Copyright 2015 IDC. Reproduction without
strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of
IDG, the worlds leading technology media, research, and events company.
written permission is completely forbidden.

IDC White Paper Delivering Enterprise Value With Service Management

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

IDC White Paper Delivering Enterprise Value With Service Management

Uploaded by

Copyright:

Available Formats

IDC White Paper | Delivering Enterprise Value with Service Management

Sponsored by: ServiceNow

Delivering Enterprise Value with

management and change management

E nhancing the efficiency and effectiveness of their IT operations, including incident

L imiting unplanned downtime as a result of having a single consolidated service

This study applies a 12% discount rate when discussing total

benefits and costs over the five-year analysis period, whereas

Document #254569 2015 IDC. www.idc.com | Page 1

annual benefits discussed in this study are not discounted.